Rethinking
Strategies for Poverty Alleviation in the South Asian Context

Bushra
Gohar

Background:

South
Asia is home to the poorest with 43.5% of the world’s poor surviving
on less than a dollar a day, is the most illiterate with some
400 million illiterate adults, the most malnourished with over
80 million malnourished children and above all the least gender
sensitive region. Preventable diseases kill 3.2 million children
each year. Girls and women form the vast majority of these deprived
millions. The region has also emerged as the most poorly governed
regions in the world.

Though
the estimates of the incidence of Poverty vary widely in the
region, the basic fact that all the seven countries in South
Asia are deeply entrenched in mass poverty remains unchallenged.
A recent UNDP’s report an increase in the number of poor people
in South Asia in the 90s with the exception of Sri Lanka. This
is indicated in the graph below.

Countries

Mid
80s (million)

Mid
90s (million)

Annual
Change (%)

Bangladesh

49.0

54.1

0.8%

India

277.4

335.3

1.9%

Nepal

7.0

9.8

3.1%

Pakistan

28.9

31.8

1.4%

Srilanka

4.5

4.0

-2.4%

As observed earlier the region has made very little progress
in eliminating illiteracy. With over 400 million (1)
illiterate adults, nearly one half of the world’s total and
over 50 million out of school children it is the most illiterate
region in the world. 45 percent of the world’s illiterate female
adults live in South Asia. The social and economic implications
of such neglect are without doubt huge.

Reproductive
health in the region is in a dire state because of neglect of
women’s health and nutrition during pregnancy and lack of facilities
for safe delivery. Similarly the incidence of malnutrition among
children is very high. Although income poverty remains a severe
problem in the South Asia, Human Poverty affects a larger share
of the population. In income poverty Pakistan appears to do
better than India, but in human poverty India fares better.
The dimensions of human poverty vary in intensity across countries
in the region. This is highlighted in a UNDP 1999 report analysing
Human Poverty in four of the South Asian countries as follows:

Human Poverty Indicators:

Countries
in the region

Human
Poverty Index (%) 1997

People
not expected to survive to age of 40 (%) 1997

Adult
Illiteracy (%) 1997

Underweight
children under 5 (%) 1997

Bangladesh

44

22

61

56

Nepal

52

23

62

47

Pakistan

42

15

59

38

India

36

16

47

53

Source
UNDP-1999a

The
region has a very high population growth, which according to
one report is expected to cross 1330 million in the 2000-2005.
Given the slack in economic growth in the region, the problems
of mass unemployment, health erosion, illiteracy and inequality,
hunger and malnutrition will invariably increase with the population
growth. The ecological imbalance emanating from the heavy erosion
in the mountainous region may lead to serious problems of flood,
drought and other national disasters of catastrophic magnitude.
It is one of the most disaster prone areas—with recent floods
and drought in India, Bangladesh and Pakistan devastating the
areas where they occurred.

Rapid
urbanisation in South Asia is giving an explosive dimensions
to its widespread poverty and human deprivation. Today about
one in four South Asian or roughly 330 million live in cities.
South Asia’s rate of urbanisation over the last quarter of a
century has been faster than all the regions of the world except
East Asia and the Pacific. At the rate it is multiplying, nearly
half of South Asia’s population will be living in urban areas
by the year 2025 (2).

The
regional growth patterns in most of the critical sectors, including
agriculture, industry, manufacture and services have not recorded
any perceptible increase.

With
the regional average savings rate of 13.28 percent and investment
rate of

18.65
percent, South Asia has been in the vortex of resource crunch.
The situation has been further affected by the ever, increasing
balance of payment deficits. With no immediate shift in the
production and export structure of the region, this deficit
dynamics will further deepen thereby aggravating the dependence
on external finance. Presently the regions external debt exceeds
150 billion dollars.

Despite
the poor economic and social sector development, the spending
levels on defence are very high, particularly in India and Pakistan,
who together spend over USD 12 billion a year on defence. The
international aid for social sectors development i.e. education,
health and people’s empowerment is approximately 9 percent not
an adequate level to ensure human poverty alleviation in the
area.

Despite
such a daunting situation, there is an apparent absence of political
will for tackling the growing human poverty in the region. The
previous very slow annual rate of progress is maintained the
region will take over century to move to high development category.

Why is the region in such dire state?

The
nature of poverty in South Asia is characterised by common symptoms
of :

socio-economic
deprivation,

rampant
corruption,

poor
governance,

political
instability,

Religious
fundamentalism

Regional
volatility

politico-cultural
alienation,

inaccessibility
to state resources and technology.

It
is important to note that the identification of these symptoms
have always been a complicated in the region and administratively
problematic exercise. Over the years, the very profile of poverty
has become multidimensional requiring comprehensive and well-devised
measures to combat it.

Case Study: A Profile of Poverty in Pakistan:

More
than fifty years after independence, Pakistan’s most critical
socio-economic problem remains its widespread human poverty.
According to the Poverty Report 1997-1998 published by UNDP,
Pakistan has not been able to provide a better or satisfactory
standard of living for its people. The current level of unemployment/under
employment is about 16%. Since the population growth is 2.8%
per annum, 1.1 million people would be added to the labour market
each year. With the limited absorption capacity of the labour
market, nearly half of these new entrants would be unable to
find jobs.

In
the 1999 HDR Human Development Index (HDI), Pakistan ranked
138 out of 174 countries (previous ranking: 134). Its Gender
Development Index (GDI) for 1997 was 116 lowest being 143, with
a Gender Empowerment Measure (GEM) of 101, where only one country
scored a lower ranking (Niger at 102). Both the percentages
as well as the absolute numbers depicting this deprivation are
mind boggling:

42
million people—or roughly 30 percent of the population in
Pakistan are income poor;

47
million adults or 62 percent of the adult population cannot
read or write;

29
million of these or 76 percent are women.

8
million children are out of school;

61
million people or 45 percent of the population have no access
to safe drinking water;

54
million people or 40 percent of the population have no access
to even basic health services;

72
million people or 53 percent of the population have no access
to sanitation;

9
million children under the age of 5 or 38 percent of the under
5 population are malnourished.

The
bulk of the poor are rural and female. Mounting debt service
payments and military expenditures leave very little for social
sector investments. Government expenditures on the social sectors
have averaged less than 3% of GNP. In addition, factors such
as skewed income distribution, absence of land reforms and agriculture
income tax, an overwhelming reliance of fiscal policy on indirect
taxes, rampant inflation, weak public sector and weal or mal
governance have caused social indicators to remain unacceptably
low and have perpetuated and exacerbated geographic disparaties.

One
report (Mahbub ul Haq Centre, 1999) concludes that the number
of absolute poor increased from 24 million to 42 million between
1990 and 1995. This is consistant with the slow down in economic
growth experienced by Pakistan in the 1990s, the drop in foreign
investment, falling remittances, inflation and cuts to the development
budget. It is also consistant with Pakistan’s high population
growth rate. Despite a fall in the fertility rate to 2.8% in
the late 1990s, the current population of 130 million is likely
to increase to 250 million by the year 2020 (UN, 1997).

National Poverty Reduction Strategy

The
Government of Pakistan has undertaken a number of initiatives
to address poverty over recent years. It constituted a Task
Force on Poverty Eradication in 1997 and established a Working
Group on Poverty Alleviation in 1998 to contribute to the 9th
Five Year Plan.

Critically
though, Pakistan still lacks a formal poverty reduction policy
and action plan, but the preparation of such a strategy is underway.

In
the first quarter of 1999, UNDP (through the Local Dialogue
Group Process involving government, civil society and the international
community) supported the Government of Pakistan in the drafting
of Pakistan’s first ever "Federal Human Development and
Poverty Strategy". The draft strategy was not adopted by
the GoP formally because the Pakistan Development Forum in Paris,
where it was to be launched, was deferred twice in 1999 and
then the government changed in October 1999.

Since
then, the GoP has been involved in a lengthy process of drafting
the Interim Poverty Reduction and Growth Strategy Paper, in
an attempt to meet IMF terms and conditions. The most recent
IPRSP was released just in September 2000, and is widely circulated
amongst the international community. It is expected that the
final PRSP will be approved in early 2002, with the draft having
been through a series of consultative workshops in 2001. In
the meantime, a standby loan is being negotiated with the IMF
to cover the next 10 months.

There
are a number of Poverty Alleviation Programmes established in
Pakistan:

Social
Action Programme (SAP), the main Government Social Sector
Programme

Pakistan
Poverty Alleviation Fund Corporation (not-for-profit, private
company established by the government to provide microcredit,
community based infrastructure and capacity building to NGOs
working with the poor).

Rural
Support Programmes

The
extended family system remains Pakistan’s important social safety
net (World Bank, 1995). Pakistan has two major Government cash
transfer safety net programmes, Zakat and Ushr and the
Bait-ul-Mul. In recent years, the government also established
several credit schemes to promote self-employment and employment,
examples being the Yellow Taxi Scheme and Small to
Medium Enterprise Development Authority (SMEDA).

Microcredit
Bank (transferring the loan portfolio of the RSPs to the Microcredit
Bank)

Redefining
strategies for change:

The
growing income and human poverty challenges faced by the region
needs to be addressed through integrated policies at the national,
regional and international levels. Just as the incidence of
poverty is multidimensional the states will need to adopt multidimensional
approaches to addressing root causes for the present situation.

In
this process it is important for each national government to
recognise the potential of the people of the region. Further,
in order to formulate a realistic financial strategy, the main
focus should be on the reallocation of existing budgets. The
current military spending levels, which are quite high, particularly
in India and Pakistan, will have to be cut substantially and
allocated for the alleviation of human poverty. This expenditure
can be considerably reduced if regional and international efforts
are strengthened for negotiations and mediation for a peaceful
settlement of all outstanding disputes.

South
Asia must concentrate all its efforts to ensure basic education
for all its children within the next five years. This will require
schooling facilities for an additional 65 million children;
training for an additional 2.05 million teachers, three fourths
of them female; and total estimated recurrent cost of USD 1.15
billion a year or 0.3 per cent of the combined GNP of South
asia during this period (3).
A number of innovative methods may also provide adequate funding
for the goal of universal primary education. Some countries
have resorted to special levies earmarked for education spending.
Pakistan levied a special Iqra surcharge on all imports to raise
substantial revenues for education but, unfortunately, the revenue
proceeds were not separated from the general budget and therefore
never earmarked specifically for education.

South
Asia must also produce sufficient technical skills to accelerate
its economic growth and to position itself for the competitive
challenges of globalisation in the twenty-first century.

International
donors should allocate a higher percentage of their existing
aid funds to education, particularly basic education and technical
training. At present only 9 per cent of external assistance
to South Asia is allocated for human priority needs ie basic
education, primary health care, nutrition, safe drinking water,
and family planning services. This is less than half of what
needs to be done in the spirit of the 20:20 compact endorsed
at the World Summit for Social Development held in Copenhagen
in 1995.

Another
innovative mechanism for addressing the twin concerns of high
external debt servicing and low education spending is debt for
social development swaps. Unfortunately, South Asia has no been
a beneficiary of such swaps even though the region’s external
debt exceeds USD 150 billion. If South Asian governments improve
their fiscal management and overall economic governance, they
will be in a position to negotiate such debt for social development
swaps.

Finally
and most importantly, Regional cooperation is no longer a matter
of choice for South Asia. At a time when countries throughout
the world are regrouping on the basis of economic blocs, South
Asia can ill afford to remain immobilised in political discord.
In fact, the potential for co-operation between the SAARC nations
is enormous. The region has a potential market of 1.2 billion
consumers; the largest middle class in the world, hard working
low wage labour and tremendous potential to unleash the creative
energies of chained economies.

On
the economic front, South Asian countries have been more enthusiastic
about opening their domestic markets to countries outside the
region rather than to each other—only 13.3 percent of South
Asian total trade is with in the region compared to over 55
percent for ASEAN countries..a small step towards economic integration
could translate into net benefits of nearly 1.5 billion dollars
(4). Much greater
cooperation as envisaged by the 1993 South Asian Prefrential
Trade Agreement (SAPTA) could make these gains from cooperation
even larger. This would also reduce the extensive smuggling
of goods across borders. Greater cooperation will lead to a
revolution in the communication and energy sector.

Greater
South Asian co-operation could lead to a substantial ‘peace
dividend’, without sacrificing human security in the region.
Civil society initiatives can also gain new impetus from greater
South Asian cooperation. For instance, Bangladesh, which has
some of the finest NGOs in the world, has much to teach other
South Asian countries about ways to operate successful educational
and micro-credit programmes for the poor.